How Do Professional Athletes Benefit From Financial Advisors?
An athlete’s advisor must understand the different payment structures in various leagues. For example, the NBA player can receive year-round or season-only payments, while baseball players are paid only during the season. Athletes should know the financial implications of such payments and the best ways to protect their future. Financial advisor professional athletes can help find the right balance between income and investment planning.
Creating alternative sources of income
While salaries comprise the largest portion of an athlete’s income, they are relatively stable because they are set in long-term contracts and rarely fluctuate much. During free agency, salaries will fluctuate much less. The second most common source of revenue for an athlete is endorsements. Athletes can earn money from various sources, including endorsements from companies.
Many top-earning professional athletes blow through their seven-figure salaries very quickly. As a result, they have no time to make better financial decisions and can become complacent, leading to substantial mistakes. These mistakes range from extravagant luxury spending to not helping struggling family members. Instead, these athletes should develop a relationship with a trusted advisor to ensure they make the best financial decisions.
As a professional athlete, you should seek help from a tax planning specialist to ensure you’re not paying more tax than you should. Athletes’ tax planning is complicated because they often earn income from multiple jurisdictions. A tax advisor can help you minimize your tax burden by guiding you through the maze of tax laws. While it may seem overwhelming, it’s far easier than you think. With the right advisor, you can have the best possible tax strategy.
Investment advisory is essential for professional athletes, as their salaries can be millions. However, many athletes don’t have the time or knowledge to build a financial plan. Fortunately, there are investment advisers out there that can help athletes develop investment and financial plans that will allow them to build a safety net and generate alternative income. These services can also help athletes protect themselves from the risks of professional sports.
The first tip is to choose an experienced financial advisor specializing in the industry. Although most financial advisors can design and construct investment portfolios for anyone, few specialize in working with professional athletes. Because of their sudden wealth, unpredictable job security, and limited financial expertise, professional athletes are vulnerable to investment scams and lawsuits. For this reason, athletes should look for investment advisors with experience working with professional athletes. This way, they can be confident that their money is in safe hands.
For professional athletes, retirement planning is an important step in transitioning into a new phase of life. While the first goal is to pay off debts and invest the money, it’s equally important to consider what happens to the money once the athletes leave their careers. Unfortunately, many players spend their money too soon, launching new careers in real estate, fashion, sports broadcasting, and restaurants. Statistics show that six out of ten former NBA players have spent all their earnings within five years of retirement.
The average professional athlete retires well before age 30, but the situation is different for professional athletes. Although most people have about 40 years to prepare for retirement, professional athletes may only be able to continue playing for eight to 10 years, making it vital to start saving early. A financial advisor can help athletes plan for the transition to retirement. However, it is also important to consider the type of career one wants to have after retirement. Most players can expect to earn anywhere from $85,000 to $1 million annually.